18 June 2014

When General Ne Win seized power in Myanmar in 1962, the military (Tatmadaw) abolished all civil society associations, including labour unions, farmers’ unions and student unions. The military state confiscated farmers’ customary holdings, and despite officially propagating the ‘Burmese Way to Socialism’, erased labour rights along with the rule of law. As the country democratises, however, shop floors are becoming sites of contention: in May 2012 a strike spread across Yangon’s industrial zones as Myanmarese workers demanded higher wages and better working conditions. For the first time in five decades, they could do so legally.

While the junta is now referred to as the ‘previous government’, the country’s current leadership is only semi-elected as the military reserves one-fourth of the seats in Parliament. Billboards along the highways still proclaim the “Eternal Unity” of the people and the Tatmadaw. There have been important changes, though: pre-publication censorship was lifted in 2012 and Yangon University’s central campus re-opened to undergraduates in December 2013. Importantly, in October 2011 Parliament passed the Labour Organisation Law (Pyidaungsa Hluttaw Law No. 7/2011) which came into force in 2012. The legislation allowed for the formation of ‘Basic Labour Organisations’ (BLOs) at the factory level and upheld their right to strike, while a follow-up law in 2012 created arbitration bodies to settle labour disputes. These laws replaced the colonial-era Trade Union Act of 1926 and abolished General Ne Win’s 1964 ‘Law Defining the Fundamental Rights and Responsibilities of the Peoples’ Workers’.

Having a right on paper is not, of course, the same as exercising it in practice. Workers have complained to local media that they risk redundancy for organising collectively. Moreover, though labour organisations in Myanmar could, in future, play an important role in enforcing pro-labour legislation, they are now hampered by splits among competing associations that aim to connect the newly-formed groups. As unions struggle to merge, Myanmar’s manufacturing sector is already open for global sourcing and is becoming increasingly exposed to international competition. Rich in natural resources as well as cheap labour, the country is already being referred to as the ‘ultimate frontier market’. A 2013 report by global consulting firm McKinsey & Company predicts that “Myanmar could conceivably quadruple the size of its economy, from $45 billion in 2010 to more than $200 billion in 2030 – creating upward of ten million non-agricultural jobs in the process”. Myanmar would, however, need to more than double labour productivity to achieve these figures.

But what would productivity look like in practice? For the most part, Myanmar’s garment sector uses outdated equipment and management practices, but has also had to adapt to survive years of Western economic isolation, when many companies folded. Taking orders primarily from Japanese, Korean and Chinese companies, many factories in Myanmar produce pieces of higher quality and complexity than their often-dilapidated appearances would suggest. One of the more modern factories in Yangon’s Hlaingtharya Industrial Zone uses a flag system on the factory floor in an attempt to increase productivity – green above the worker’s chair if the previous day’s target was surpassed, yellow if it was met, red if it was missed. A mid-level female manager supervises as the flags wave above the young women operating the machines and the men stand ironing, in rows marked with shame or success.

This kind of pressure can be exhausting. Rolling cheroot cigars in her home workshop in Bago, a city an hour north-east of Yangon, one woman told me why she left her job in a shoe factory: “Here you are your own boss. You can sit instead of standing and adjust the hours that you want to work. You can sleep in the house and you don’t have to get a hostel.” Though she left the factory, others are eager to obtain steady jobs in a country with high underemployment, where three children commonly wait on a single customer in a teashop, paid only with room and board.

The structural transformation of Burma’s economy is one element of the storyline elucidated by an aspiring developmental state – the narrative of the country’s ‘triple transition’ from closed to open economy, authoritarianism to democracy, and war to peace. The connections between these three elements, though, need to be examined in more depth.

Suits, shoes and politicsIndustrial unrest came to Yangon even before the unions finished registering, with a raft of strikes in the garment sector throughout May and June 2012. While unionisation efforts proceed among taxi drivers, among workers on offshore oil and gas rigs, and in the larger mines, the most active unions thus far are in the garment sector. According to Ministry of Labour records, more than 500 BLOs had registered by June 2013, and there were 959 registered as of January 2014. These unions are predominately formed at the factory level, and are known as a loat that mar a phwe a see (work force organisations). Aside from the BLOs, there are also some township-level organisations and newly created federation-level unions. In his May Day message to workers, President Thein Sein noted the official registration of 1092 ‘labour and employer organisations’. Though the increase in registrations has been rapid, there are limits to the legal scope of union action. Under the new law, unions are prohibited from striking for ‘political’ causes, and the leaders of associations coordinating the various factory-level unions express concern at being labelled ‘outside agitators’.

Despite growing union representation, tropes portraying the Myanmarese workforce as pliant remain: in 2012, Malaysia offered work visas to ‘polite’ Burmese maids, while the representative of a multinational corporation said at a recent conference, “in Myanmar, we are willing to learn, we obey our managers, and in today’s society that’s not an easy thing to find.” It is hard to tell whether this observed obedience is a product of fealty or fear.

In most Myanmarese-owned factories the female workers wear thanaka, the traditional gold paste, on their cheeks, and donate to co-workers’ weddings or relatives’ funerals, as is socially expected. As is common in the industry worldwide, the vast majority of Myanmar’s garment workers are women. Though the supposed meekness of the worker is sometimes feminised, Myanmarese women are active in factory management and ownership, as well as in union leadership, in contrast to Bangladesh where most line supervisors are male. After the promulgation of the 2011 Labour Organisation Law, some factory managers founded ‘tame’ unions at their workplaces, asking the minimum 30 workers to sign up as union members on paper. Not all of these unions remained docile, however. In February, one woman told me how she took over the leadership of her ‘tame’ union and led it on strike. These strikes can succeed: in March, workers at a Korean-owned factory in Yangon won a 20 percent pay raise through collective bargaining. Common grievances include not only the level of monthly pay, but the pay structure, which is often composed of bonuses exceeding the small base salary for overtime or perfect attendance.

Many of the young women in Yangon’s factories have migrated from the country’s poverty-stricken central Dry Zone. When they can, they send money home to their families. As housing costs in Yangon have shot up, the cost of urban living has also risen. This squeeze has caused many new factories to be situated further from the city. In Bago, about 14 factories, many with foreign ownership, are slated to open next year. The working conditions and wages within these factories will soon be determined through negotiation and struggle.

Despite these challenges (and in a narrative familiar to economic historians), a robust manufacturing industry has the potential to lift many out of rural poverty. And rural poverty in Myanmar is real. Though no data yet maps the whole country, a rapid needs-assessment conducted by the World Food Programme found that 27 percent of children in the Dry Zone are chronically malnourished. There is variation even in poor regions, though; in the villages receiving remittances, the children can eat.

Neighbours, borders and competition The global garment industry is notorious for its cutthroat nature, creating a ‘race to the bottom’ as firms move their sourcing across borders in search of the lowest wages and the most corners to cut. But would better working standards hurt Myanmar’s competitiveness? Not necessarily – the International Labour Organisation (ILO) argues they would help. Global firms, wary of ‘reputational risk’, may find benefit in implementing more professional workplace standards. A recent survey showed fewer safety violations in foreign-owned firms in Myanmar than in locally-owned ones. Industrial engineering and greater technological investment saves time and money, and companies know that strikes are costly, all the more so in the garment industry, where a single missing worker disrupts the production process. Even small errors or miscommunication in the factory cost time, fabric and money.

While arguments of ‘reputational risk’ hold some merit, in 2013 regional competitor Bangladesh recorded a banner year for investment in garment manufacturing, despite the Rana Plaza factory collapse and notoriously egregious working conditions throughout the industry. There are, in short, multiple equilibria at which garment manufacturing is profitable, and Myanmar may hope to land at a better level than some of its neighbours by relying on high quality and improved productivity rather than the exploitation of workers. Unlike in Bangladesh, where a strong owners’ lobby has repeatedly blocked the enforcement of regulation, the political economy of this process in Myanmar is still in flux.

In 2015, Myanmar will begin formally integrating into the Association of South East Asian Nations (ASEAN) Economic Community. (Though holding SAARC observer status, Myanmar remains outside of Southasia’s regional infrastructure.) Within ASEAN, basic labour laws are encouraged as prerequisite steps to integration, and could provide Myanmar with the foundations for its foray into global markets. For now, many Western brands and buyers remain on the sidelines, content to place test orders with Myanmarese factories without making large commitments. According to organisations such as the Myanmar Centre for Responsible Business, better labour relations might reassure these buyers and secure their investment.

Other considerations could also spur reform in labour standards. For nationalists defining themselves in opposition to neighbouring countries, the opportunity to set a regional benchmark in labour relations and development could provide an incentive for action. Returning from a trip to Japan to study the privatisation of state-owned enterprises, one military official remarked, “I look at Tokyo and I feel sad for my country.” But while treaties for economic integration in the ASEAN region will create a freer regime for the movement of skilled labour and reduce Myanmar’s barriers to trade, unskilled labour will remain confined within national borders. In the region’s poorer countries, where there is high underemployment, more people may find new jobs without the wage level necessarily rising.

Amid calls for integration, instability in the immediate neighbourhood also figures in the government’s calculations: the Rana Plaza collapse in Bangladesh and a destabilising backlash against welfare measures (rice subsidies and a high minimum wage) in Thailand, are of concern to Myanmar’s political class. Perhaps uneasy about dynamics in neighbouring Cambodia, where the violent suppression of garment-worker strikes made headlines in January, or in Sri Lanka, where most garment unions are allied with political parties, Myanmar’s government has been publicly supportive of workers’ rights while pushing unions to stay ‘apolitical’. In his May Day message the President stated, “I would like to urge workers to abide by labour laws and to place emphasis on peace in the workplace… Only when one lives in accordance with laws and rules and regulations, can one enjoy the true essence of democracy.” The question of how these laws, rules, and regulations are to be formulated, though, remains.

Growth and political order Myanmar could become a poster child for peaceful transitions, presenting an example of what political scientist Dan Slater terms ‘strong-state democratisation’, in which authoritarian regimes reform from a position of strength. Yet the ruling regime faces something of an impasse in terms of the right sequence for reform. Should it be democracy, which allows good decision-making and then growth? Or growth first, and democracy later, when (and if) a middle class comes into existence and demands it? And then there is the issue Myanmar is resolutely not addressing: the violence against Muslims in Rakhine state. Elsewhere, recent instability in more developed countries such as Venezuela, Thailand and Ukraine, illustrates how the mechanisms underlying these changes are more complicated than models which posit democracy, peace and growth as automatic companions.

Despite the current weakness of industrial unions and legislation that still hampers their development, Myanmar has come a long way from the days when, as analyst Yoshihiro Nakanishi notes, the Revolutionary Council “initiated the depoliticization of society through the control of labour unions and peasant organizations in order to achieve one-party rule,” and “political rights such as freedom of assembly and expression were severely restricted in the name of ‘organizing’ (siyounyei) and ‘unity’ (silounyei)”.

Rebuilding these institutions will take time, while economic reforms are proceeding fast – even ‘too fast,’ as U Myint, economic advisor to the president, recently suggested. As Myanmarese voters assume the responsibilities of an active citizenry, they have the capacity to push for more inclusive growth, including through trade unions. At present, more than 70 percent of Myanmar’s population is engaged in agriculture, and in the next election cycle rural farmers’ unions could form a stronger voting bloc than urban workers; though growth, urbanisation, and economic transformation will in turn alter the political landscape.

In Myanmar, economic growth may be the easiest of the factors within the ‘triple transition’ to achieve. For the gains from growth to support peace and democracy, though, rather than concentrate wealth and power further into the hands of cronies, the political centre of gravity must continue to shift. There are many opportunities for profit in the transition period, and investment will flow like water to seek them out. Equity and justice, though, are more viscous substances.

~ K Michener is a Yangon-based researcher. Her academic interests include conflict, collective action, and migration.